Rupee ends weaker, state bank dollar sales cap fall

Reuters - The rupee ended weaker on Friday on importer dollar demand and fewer exporter conversions, even as investors said the currency could weaken further after the Central Bank decided to buy dollars directly from the market to boost reserves.

Dealers said the state bank dollar sales curbed further decline.

Rupee forwards were active, with spot-next forwards ending at 152.90/153.00 per dollar, compared with Thursday’s close of 152.85/90. One-week forwards ended at 153.15/30, compared with the previous session’s close of 152.95/153.00.

The Central Bank is targeting $1.2 billion in direct market purchases of dollars to boost the island nation’s reserves this year, CB Governor Indrajit Coomaraswamy said on Thursday.

That comes after Sri Lanka missed its December-end reserves target agreed with the International Monetary Fund (IMF) for a $1.5 billion, 36-month loan.

Coomaraswamy said the Central Bank has purchased around $400 million directly from the market so far this year.

“There was some (dollar) demand from a foreign bank probably for bond outflow. A state bank sold dollars which prevented the fall,” a currency dealer said, asking not to be named.

“Exporters are not converting after the Central Bank announcement. They are watching the situation and we can see some importer demand.”

Dealers said it was not clear whether the state banks sold dollars on behalf the Central Bank.

‘Koley iragena angey halaganta epa. Londery hathakinn suddda karanta behe’ is the advice in pithy Sinhala idiom, the President offered to his critics and opponents in a recent homily delivered at Nikaweratiya.